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Top 50 Franchise Failures You Need to Avoid (Failure Rate)
Written by: Patrick Findaro
Last Updated by
María Fernández Amato: February 28, 2023
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Did you know 4,000 Subway franchises failed in less than three years? Or that the pharmacy giant, Health Mart had 2,000 franchise failure in the same time period?
Before you buy a franchise it is essential you receive information not just from the person or company selling you the franchise business.
Although the process of buying a franchise can seem overwhelming, we at Vetted Biz are dedicated to helping you navigate it. We take pride in providing accessible, accurate data and information to the U.S. entrepreneur community, all in order to determine which franchises are and are NOT worth buying..
Contents
How We Determine the Failure Rate for a Franchise
One method of determining the viability of a franchise is taking into account recent closures. Both in terms of the number of closures and closure rates. Through comprehensive analysis of more than 1,500 franchises, we at Vetted Biz have come up with the top 50 franchise failure.
The data was compiled by summing the franchise failures over a three year period (either 2016-2018 or 2017-2019 depending on data available).
Franchise Failure Calculation
Franchise failure comprise franchise terminations, franchise non renewals and franchises that ceased operations for other reasons. All of these metrics are accessible in Item 20 of the Franchise Disclosure Document (FDD). The FDD is a uniform document regulated by the FTC. All franchisors selling franchises must update their FDDs at least once a year.
Franchise Failure Terminology Defined
Franchise terminations occur when the franchisor cancels the agreement before the end of the term (generally 10 years). Due to the contractual nature of the franchisor/franchisee agreement, franchise terminations generally do not occur without an explicit outstanding reason. Such as something as serious as fraud.
Franchise non-renewals, on the other hand, occur at the end of the franchise term and can occur for any number of reasons. The Franchisee might no longer see the value in the brand and prefer the run the location as an independent business.
The last metric of franchise failures is the number of franchises that ceased operations for other reasons. This is the broadest of the three categories, and a point of concern because it could be an indicator of franchise bankruptcy.
Top 50 Franchises Failures
1) Subway
Subway Franchise Failures (2017-2019): 4,148
Description: Subway offers foot-long and other sandwiches, salads and other food items from a retail store. Subway is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 23,802
2) Jazzercise
Jazzercise Franchise Failures (2017-2019): 2,061
Description: Jazzercise offers franchises the opportunity to operate as an instructor of a dance fitness program. Jazzercise is a franchise concept in the Fitness Centers industry.
U.S. Franchised Locations (2019): 6366
3) Coverall
Coverall Franchise Failures (2017-2019): 1,986
Description: Coverall provides cleaning and maintenance services with a “health-based” model for office, commercial, and medical facilities. Coverall is part of the Cleaning and Maintenance Services industry.
U.S. Franchised Locations (2019): 5,022
4) Health Mart
Health Mart Franchise Failures (2017-2019): 1,978
Description: Healthmart is an independent pharmacy franchise and one of the largest chain drug stores in the US, with more than 5,000 establishments nationwide. Healthmart is in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 5,010
6) Advanced Fresh Concepts
Advanced Fresh Concepts Franchise Failures (2017-2019): 1,610
Description: Advanced Fresh Concepts is a supermarket-based food service counter concept that offers sushi and other Asian cuisine items. Advanced Fresh Concepts is in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 3,849
7) Good Neighbor Pharmacy
Good Neighbor Pharmacy Franchise Failures (2017-2019): 1,414
Description: Good Neighbor Pharmacy is a network of retail pharmacies that are independently owned and operated. Good Neighbor Pharmacy is in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 1,167
8) Liberty Tax Service
Liberty Tax Franchise Failures (2017-2019): 1,365
Description: Liberty Tax Service offers various tax preparation and accounting services to their business clients. Liberty Tax Service is a franchise concept in the Business Services industry.
U.S. Franchised Locations (2019): 5,068
9) Bimbo Bakeries
Bimbo Bakeries Franchise Failures (2017-2019): 839
Description: Bimbo Bakeries is a franchise concept that sells baked goods and other bakery products. Bimbo Bakeries is part of the Food and Beverage industry.
U.S. Franchised Locations (2019): 5,953
10) Jackson Hewitt
Jackson Hewitt Franchise Failures (2017-2019): 916
Description: Jackson Hewitt provides tax and accounting services to their clients. Jackson Hewitt is a franchise concept in the Business Services industry.
U.S. Franchised Locations (2019): 3,922
11) N2 Publishing
N2 Publishing Franchise Failures (2017-2019): 827
Description: N2 Publishing is a company that sells “neighborhood publications”, or newsletters that introduce neighbors to recently moved residents of upscale areas. N2 Publishing is a company in the Business Services industry.
U.S. Franchised Locations (2019): 882
13) Matco Tools
Matco Tools Franchise Failures (2017-2019): 665
Description: Matco offers franchises the opportunity to operate a mobile business selling professional quality mechanics’ tools and service equipment. Matco Tools is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 875
14) Pizza Hut Traditional
Pizza Hut Traditional Franchise Failures (2017-2019): 626
Description: Pizza Hut Traditional provides franchises the opportunity to operate restaurants offering pizza, pasta and WingStreet chicken products and side dishes in a traditional location. Pizza Hut Traditional is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 5,953
15) Vision Source
Vision Source Franchise Failures (2017-2019): 561
Description: Vision Source is an independent practice of optometry through a network of independently owned and operated optometric offices. Vision Source is a franchise concept in the Healthcare Services industry.
U.S. Franchised Locations (2019): 3,250
16) Cruise Planners
Cruise Planners Franchise Failures (2017-2019): 536
Description: Cruise Planners offers franchisors the opportunity to operate a travel agent business, specifically in regards to cruise trips. Cruise Planners is a franchise concept in the Travel and Hospitality industry.
U.S. Franchised Locations (2019): 3,113
17) Papa Johns
Papa Johns Franchise Failures (2017-2019): 518
Description: Papa John’s sells franchises that operate a quick service restaurant specializing in pizza and limited additional menu items. Papa John’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 2,544
18) Pizza Hut Non Traditional
Pizza Hut Non Traditional Franchise Failures (2017-2019): 500
Description: Pizza Hut Non Traditional refers to unorthodox business models that sell Pizza Hut products, such as mall kiosks, retail counters, sit down restaurants, and mini kitchens. Pizza Hut Non Traditional is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 1,440
19) Burger King
Burger King Franchise Failures (2017-2019): 463
Description: Burger King is a fast food restaurant chain that primarily sells hamburgers, fries, soft drinks, and other related goods. Burger King is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 7,294
20) McDonald’s
McDonald’s Franchise Failures (2017-2019): 431
Description: McDonald’s provides franchises the opportunity to operate a quick service restaurant offering a limited menu of value-priced foods. McDonald’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 13,185
21) Century 21
Century 21 Franchise Failures (2017-2019): 391
Description: Century 21 provides services to their clients in regards to property listings, houses for sale, real estate agents, and a mortgage calculator. Century 21 is a franchise concept in the Real Estate industry.
U.S. Franchised Locations (2019): 2,089
22) Chem-Dry
Chem-Dry Franchise Failures (2017-2019): 393
Description: Chem-Dry is a franchise in the Home Services industry that features carpet cleaning, upholstery, and other authorized services to residential and commercial customers.
U.S. Franchised Locations (2019): 2,000
23) Dunkin Donuts
Dunkin Donuts Franchise Failures (2017-2019): 389
Description: Dunkin’ offers franchises to operate restaurants featuring Dunkin’ coffee, donuts, bagels and other related food items and beverages. Dunkin’ is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 8,292
25) Chester’s
Chester’s Franchise Failures (2017-2019): 364
Description: Chesters is a quick-service chicken and sides restaurant located within a supermarket, convenience store, or other non-traditional location. Chester’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 1,226
26) Cruiseone
CruiseOne Franchise Failures (2017-2019): 332
Description: CruiseOne offers personalized travel services specifically for cruise type vacations. CruiseOne is a franchise concept in the Travel and Hospitality industry.
U.S. Franchised Locations (2019): 1,280
27) Cellairis
Cellairis Franchise Failures (2017-2019): 323
Description: Cellairis is a company that provides cell phone repair services and sells screen protectors, phone cases, and other cell phone related products. Cellairis is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 211
28) Cornwell Quality Tools
Cornwell Quality Tools Franchise Failures (2017-2019): 311
Description: Cornwell Quality Tools offers franchises the opportunity to purchase, resell and service products for the automotive and aviation industries. Cornwell Quality Tools is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 689
29) Serendipity Labs
Serendipity Labs Franchise Failures (2017-2019): 297
Description: Serendipity Labs is a company that leases office space and shared workspaces to their customers. Serendipity Labs is a franchise concept in the Travel and Hospitality industry.
U.S. Franchised Locations (2019): 3,104
30) Mac Tools
Mac Tools Franchise Failures (2017-2019): 296
Description: Mac Tools provide franchises the opportunity to operate a business involving the mobile sale of professional automotive tools and similar products. Mac Tools is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 687
31) Miracle-Ear
Miracle Ear Franchise Failures (2017-2019): 277
Description: Miracle-Ear is a hearing aid business which sells a complete line of quality hearing aids and certain related products and services. Miracle-Ear is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 1,452
32) KFC Traditional
KFC Traditional Franchise Failures (2017-2019): 265
Description: KFC offers franchises the opportunity to operate a dine-in and carryout KFC outlet selling chicken and other menu items. KFC Traditional is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 3,980
33) Dickey’s Barbecue Pit
Dickey’s Barbecue Pit Franchise Failures (2017-2019): 264
Description: Dickey’s Barbecue Pit offers freshly prepared barbecue style meats and other food products. Dickey’s Barbecue Pit is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 502
35) Management Recruiters International
Management Recruiters International Franchise Failures (2017-2019): 243
Description: Management Recruiters International provides talent searching and talent finding services for businesses looking to hire their next executives and management. Management Recruiters International is a franchise concept in the Business Services industry.
U.S. Franchised Locations (2019): 292
36) Great Clips
Great Clips Franchise Failures (2017-2019): 241
Description: Great Clips provides franchises the opportunity to operate a Great Clips Salon offering a required line of haircare services and products. Great Clips is a franchise concept in the Health and Beauty industry.
U.S. Franchised Locations (2019): 4,473
38) Kumon
Kumon Franchise Failures (2017-2019): 232
Description: Kumon offers franchises the opportunity to operate an after-school center that provides math and reading programs using the Kumon Method of learning. Kumon is a franchise concept in the Education Programs industry.
U.S. Franchised Locations (2019): 1,547
Renaissance Hotels Franchise Failures (2017-2019): 232
Description: Renaissance Hotel operates a full-service, luxury hotel that combines comfort and style to provide an exceptional customer experience. Renaissance Hotels is a franchise concept in the Travel and Hospitality industry.
U.S. Franchised Locations (2019): 3,113
40) Red’s Savoy
Red’s Savoy Franchise Failures (2017-2019): 232
Description: Red’s Savoy Pizza sells specialty and create your own pizzas, wings, breads, salads, pasta, beverages, and more related items. Red’s Savoy is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 3,113
41) Papa Murphy’s
Papa Murphy’s Franchise Failures (2017-2019): 226
Description: Papa Murphy’s is a take and bake pizza company where they sell pre-made pizzas to their customers for them to cook on their own time. Papa Murphy’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 1,256
Long John Silver’s Franchise Failures (2017-2019): 225
Description: Long John Silver’s is a restaurant chain that specializes in seafood fast food, mostly fish and shrimp products. Long John Silvers is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 545
43) Smile Sources
Smile Source Franchise Failures (2017-2019): 225
Description: Smile Source offers routine dental treatments, conducting exams to diagnose extensive implant, cosmetic and orthodontic health problems. Smile Source is a franchise concept in the Healthcare Services industry.
U.S. Franchised Locations (2019): 734
44) Auntie Anne’s
Auntie Anne’s Franchise Failures (2017-2019): 217
Description: Auntie Anne’s offers franchises the opportunity to operate a retail shop featuring baked soft pretzels, lemonade, and related food and beverage items. Auntie Anne’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 1,200
45) 7-Eleven
7-Eleven Franchise Failures (2017-2019): 217
Description: 7-Eleven offers franchises the opportunity to operate an extended-hour retail convenience store selling a broad array of products. 7-Eleven is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 7,213
46) Rodeway Inn
Rodeway Inn Franchise Failures (2017-2019): 212
Description: Rodeway Inn is a chain of low-priced lodging accommodations throughout the US and Canada. Rodeway Inn is a franchise concept in the Travel and Hospitality industry.
U.S. Franchised Locations (2019): 600
47) Coffee News
Coffee News Franchise Failures (2017-2019): 208
Description: Coffee News is a weekly advertising publication and is mainly delivered to restaurants, coffee shops, and other small businesses/local dining establishments. Coffee News is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 335
Merle Norman Cosmetics Franchise Failures (2017-2019): 207
Description: Merle Norman Cosmetics is a cosmetics company that manufactures and sells makeup, skincare, and personal care products. Merle Norman Cosmetics is a franchise concept in the Retail Products and Services industry.
U.S. Franchised Locations (2019): 1,002
49) Applebee’s
Applebee’s Franchise Failures (2017-2019): 206
Description: Applebee’s is a casual table service restaurant that offers food and alcoholic beverages. Applebee’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 1,600
50) Jimmy John’s
Jimmy John’s Franchise Failures (2017-2019): 206
Description: Jimmy John’s offers franchises to operate a restaurant featuring gourmet deli sandwiches, fresh-baked breads, and other food and beverage products. Jimmy John’s is a franchise concept in the Food and Beverage industry.
U.S. Franchised Locations (2019): 2,738
Franchise Failure Conclusion
Are you surprised to see so many recognizable brands on the list?
Many of the businesses featured on the above list are the biggest names in their industry.
It is important to note that this list only comprises the number of failures, without taking into account how this number relates to the size of the entire franchise system. For example, while McDonalds ranks high up on the list, in comparison to the current number of establishments they have in the US, the number of franchise failures in relation to franchise successes is minimal.
Nevertheless, franchise failure are a useful indicator of franchise success especially for smaller, more local franchises.
If a lesser known brand has an unusually high number of franchise failures, this is something to be wary of. It is also important to cross reference with other metrics like the failure rate, stability rate, growth rate and SBA Loan Success Ratio.
Were you expecting to see any of these franchises on this list? Think you may need some outside help before choosing a franchise or business to invest in? We at Vetted Biz are here to help!
See how our professionals can help power your franchise search and analysis today.
